The California Department of Financial Protection and Innovation (DFPI) recently issued an important industry reminder regarding implementation of the California Digital Financial Assets Law (DFAL). The DFPI noted that it will begin accepting applications today, 9 March 2026, through the Nationwide Multistate Licensing System (NMLS).

The DFAL is California’s comprehensive digital asset licensing law, similar to other states’ laws like New York’s BitLicense regime. (Please review our client alert for a detailed analysis of the DFAL, which takes effect 1 July 2026). Due to the novelty of DFAL’s application and expected wave of applicants, DFPI believes that opening up the application in March provides the industry ample time to meet the licensing deadline in July. By 1 July 2026, any person or company engaging in covered crypto-related activity in California must either hold a DFAL license, have submitted an application, or otherwise determined they do not require a license.

While the statute’s scope must be assessed carefully against a company’s specific activities, it broadly applies to businesses engaging in certain digital asset activities, such as exchanging, storing, or transmitting virtual currencies. Importantly, virtual currency businesses should not assume a DFAL license is sufficient to satisfy other licensing requirements, such as for fiat money transmission. Indeed, the DFAL license application checklist explicitly requires an applicant to submit a written notice to the DFPI of their intent to qualify for a certain money transmission act license exemption under proposed regulations.